In August 2015 the U.S. Department of Transportation, Office of the Inspector General announced that it would be conducting an audit to 1) determine the number of new and existing DBE/ACDBE firms receiving contracts or leases at the Nation’s largest airports in fiscal year 2014 and 2) assess certification factors that aided and hampered new DBE/ACDBE firms pursued contracts or leases at these airports. You can see a copy of the letter here.

As early as September 2015, firms that had been denied DBE certification or that had been decertified received an email from the OIG asking several questions regarding the applicants’ experience in applying for DBE/ACDBE certification. The following are the questions that were asked:

How long did it take the certifying agency to notify your firm that it was not qualified to become a certified DBE and/or ACDBE?

Were there any deficiencies with your application that needed remediation? If so, how were you notified? What timeframes were you given to correct the issue?

You were denied DBE/ACDBE certification on [state the date]. What reasons were provided to you for the denial by the certifying authority?

Please explain your process when applying for your DBE and/or ACDBE certification. Did this process play a factor in the denial?

Did you appeal your denial with the certifying authority and/or the Departmental Office of Civil Rights? What actions were taken by the certifying authority and/or DOCR regarding your firm’s denial of certification?

Was your firm assigned a liaison or a point of contact to check the status of application and/or discuss any concerns?

Did your firm attend any training, outreach, etc., before requesting certification? Was any training offered? If so, by who?

Responses were due October 9, 2015, so we hope this means the report will becoming out soon.

Recently, Rep. Michael Fitzpatrick (R-PA) introduced a bill that would define veteran owned businesses as “Disadvantaged Business Enterprises” or “DBEs”. This is a bad idea for several reasons including if it passes it could mean the end of the Department of Transportation’s DBE program. This is because the Supreme Court has held that programs like the DBE program are constitutional so long as they are “narrowly tailored” or, in other words, not overly inclusive.

Opponents of the bill argue that the amendment is not needed because individuals who are not women or ethnic minorities can obtain DBE certification on a case by case basis using the guidelines in Appendix E to Part 26 — Individual Determinations of Social and Economic Disadvantage. However, it is almost impossible for an individual to obtain DBE certification using the Appendix E process and for Disabled Veterans I would argue that it is even less likely that they could meet the requirements. There are several reasons for this;

First, it must be noted that the Appendix E recognizes that people with disabilities have disproportionately low incomes and high rates of unemployment and recognizes that many individuals with disabilities my be socially and economically disadvantaged. However, the evidence an individual has to produce in order to prove social an economic disadvantage is difficult at best to acquire.

For example, to show that they are socially disadvantaged, an individual has to describe “personal experiences of substantial and chronic social disadvantage in American society, not in other countries”. The agency receiving the application will consider the applicant’s education, employment and business history to see if the totality of circumstances shows disadvantage in entering into or advancing in the business world. The problem is most agencies read the regulations to mean that the applicant has to show disadvantages in all three areas: education, employment and business history. Of course, most veterans, disabled or not, will have a tough time showing that that they have “substantial and chronic social disadvantage in American society” since they’ve served in the U.S. military and presumably had access to education and employment. Normally, the analysis ends there. But even if the applicant successfully shows that he meets the social disadvantage prong of the test it is all but impossible to show economic disadvantage.

Under the normal process for obtaining DBE certification, to show economic disadvantage an applicant simply has to show that their Personal Net Worth is less than $1.32 million (minus their personal residence and interest in the DBE business). Not so for the individual seeking certification using the Appendix E process. In addition to reviewing the applicant’s personal income, personal net worth, fair market value of all assets etc. the agency will “consider the financial condition of the applicant compared to the financial profiles of small businesses in the same primary classification, or, if not available, in similar lines of business, which are not owned and controlled by socially and economically disadvantaged individuals in evaluating the individual’s access to credit and capital”.

Agencies normally read this to mean that the applicant has to produce the profiles of other business for the agency to compare. This of course is next to impossible because it would require an individual to obtain the financial information (tax returns, profit and lost statements, balance sheets, etc.) of their competitors in order to prove economic disadvantage. Anyone in business knows that this is an insurmountable hurdle. (That’s why I have unsuccessfully argued in the past that because it is impossible for the applicant to obtain this information the onus necessarily has to be on the agency, who has access to such information to do the comparison.)

While I agree that Rep. Fitzpatrick’s bill would cause irreparable harm to the DBE program and subject it to constitutional challenge, those opposing the bill would be better served not to make the argument that individuals who are not women or minorities can obtain DBE certification on a case by case basis because it is, in fact, almost impossible to do so.

Miami-Dade County’s Board of County Commissioners will soon be voting on changes to the County’s Community Small Business Enterprise (CSBE )and Small Business Enterprise (SBE) programs. Both programs are race and gender neutral and can be utilized when the County is not using federal dollars on a particular project. To be eligible for SBE certification, a firm must average gross revenues for the last three (3) years not exceeding $5 million except manufacturers whose number of employees cannot exceed one hundred (100) and wholesalers whose number of employees cannot exceed fifty (50). The firm must also be located and performing a commercially useful function in Miami-Dade County.

For CSBE certification, the firm must be located and performing a commercially useful function in Miami-Dade County. It cannot exceed 3 year average gross receipts of $10 million for general building, $6 million for heavy construction contractors, and $5 million for specialty trade contractors. The firm’s qualifier must own at least 10% of the certified firm’s issued stock. Finally, the Personal Net Worth (PNW) does not exceed $1,500,000 for each owner.

The amendments to the program deal mostly with the PNW requirement and the requirement that firms must be located in Miami-Dade County. If the BCC approves the changes, the PNW requirement for owners of both SBE and CSBE firms will amended so that PNW cannot exceed $1.5 million per owner. This excludes the value of the business and the value of retirement accounts (if documentation is submitted to the Small Business Development).

The amendments would also require business have a physical location in Miami-Dade County as virtual offices will not be allowed.

Finally, firms applying for either certification must have a Miami-Dade County Local Business Tax for one year prior to certification.

Should these changes pass, we anticipate many firms that are currently CSBE or SBE certified will be come ineligible for the programs. To be clear, the CSBE and SBE programs are local programs and are different from the Department of Transportation’s Disadvantaged Business Enterprise (DBE) program. But many firms that qualify for the DBE program also qualify for one or both of the County’s local programs. We anticipate situations where a firm that had multiple certifications could lose one or more.

That’s because under the DBE program, the person upon whom certification is based cannot have a PNW that exceeds $1.32 million excluding that person’s interest in the business and value of the person’s primary residence.

The County’s changes do not exclude the owner’s interest in their primary residence. It also applies to all owners. Those differences are enough to raise the possibility that some firms that currently hold all three certifications SBE, CSBE and DBE may be ineligible for one or more certification should the County enact the changes. If your firm does business in Miami-Dade County, it’s important to determine whether these changes affect your business now, before the changes are enacted. If you will be negatively impacted by the changes contact your County Commissioner immediately and voice your concerns.

We receive calls every week from people whose DBE applications have been denied. Unfortunately, in about 95% (or more) of those cases it’s too late to help. That’s because once you’ve been denied, it’s too late to try to correct your application or provide the agency with any additional information. Once you been denied the process is closed and your only options are to wait a year to reapply (after you’ve corrected whatever issues were brought up in the denial) or appeal the denial decision.

Under the regulations, once you are denied you have 90 days to appeal to the Department of Transportation (DOT). The DOT can take up to 180 days (6 months) to make a decision. If the DOT sides with the Agency’s denial you have to wait an additional year before you can reapply for DBE certification.
So whether you choose to wait to reapply or you appeal, one small mistake can cost you up to a year or more wait for DBE certification. It gets worse.

We have seen cases where the DOT agrees the applicant is correct on one issue but provides the Agency with another reason upon which to base a denial. We have also seen cases where the DOT will send the application back to the Agency for further review. This costs you even more time without a DBE certification. Finally, we have seen cases where even after the applicant makes all of the changes brought up in the original denial and waits a year, they are denied either for the same reason or different reasons.

When you add up the lost opportunity costs, the costs of filing an appeal, the time it costs you to prepare your application, sometimes it makes more sense to retain a firm like ours to prepare your application. After speaking to individuals whose applications have been denied, they often comment that they wished they had spoken to us before they’d applied. My advice is don’t be one of those people. Get professional help before you apply not after you’ve been denied.

A bid protest is a legal procedure, usually initiated by an “interested party” to contest the procedure or outcome of a government contract award. Typically, protesters are third parties (usually other bidders) who feel they’ve been harmed by a government agency’s decision to award a contract to a party who the protester feels is non-deserving.

Bid protests occur at every level of government, federal, state and local. The rules that govern bid protest procedures vary from jurisdiction to jurisdiction. However, there are some rules that are generally the same regardless of where the bid protest arises.

The solicitation document (RFP, RFQ or ITB) will generally inform bidders of the bid protest procedures.

There may be statutes, administrative rules and other documents that govern bid protest procedures.

Bid protests can be resolved through formal as well as informal procedures.

The time frame for bringing a protest varies! The time frame can be as little as 3 days.

The time frame for bringing a protest based on the terms of the solicitation may have a different time requirements from a bid protest based on proposed award.

Selecting the best forum is critical to prevailing on a protest. At the federal level there are several venues for bid protests. Protests can be brought to the agency that issued the solicitation (Agency-Level Protest), the GAO, the Court of Federal Claims or through the U.S. District Courts.

At the state and local level, the rules differ. In some instances, the protest may be brought before the entity that issued the solicitation. In some cases, the state, county or municipal government will have another entity that handles administrative hearings and appeals hear the bid protest.

The rules for bid protests vary greatly depending on the jurisdiction. Whether you are the subject of a bid protest or you believe you have grounds to initiate a bid protest, it’s important that you contact someone who understands the process. At DBE Direct, we have experience representing parties involved in bid protests. We can help you defend a bid protest and keep a contract you’ve won or initiate a bid protest to win a contract you thought you lost.

There are a multitude of reasons for filing a bid protest.

Some of the more common reasons for bringing a bid protest are listed below:

Untimely Proposal. Generally, solicitation documents will set forth a deadline when responses to a solicitation must be received. If a solicitation document states that a response is due at a certain time and the agency awards the contract to a bidder who turned in its documents after the deadline, grounds for a bid protest may exist.

Missing Information. Every bidder is required to turn in a complete response to a solicitation. Bidders must complete and sign every form and provide all required document such as letters of recommendations, proof of insurance (if required), etc., etc. Missing information in response to a solicitation can be grounds for a protest.

Flawed Evaluation. A successful bid protest may result if an agency ignores its own stated procedures for evaluating proposals.If, for example, an agency states in its solicitation that an evaluation committee will review the proposals and instead evaluates the proposals in a different manner, a protest is likely. Evaluations may also be flawed when the agency evaluates proposers based on criteria not listed in the solicitation, fails to evaluate portions of a proposal or fails to identify mistakes or flaws in the winning bidder’s proposal.

Unreasonable Price Proposal. In a solicitation where cost is an issue, a bidder may successfully protest where a winning bidder’s price proposal is so low or so different from other bidders that there is either an obvious error or an unrealistic number being proposed.

Improper Discussions. Many jurisdictions recognize a “cone of silence” or a period during which bidders are not allowed to hold discussions with agency staff or elected officials. A bidder may successfully protest an award if improper discussions took place between the winning bidder and agency personnel.

Collusion. Most jurisdictions do not allow bidders to collaborate on their proposals unless they are teaming together or are in a joint venture of some sort. Cooperation between bidders who are not submitting a proposal together is collusion and can be grounds for a bid protest.

Small Business Issues. In many cases, solicitations will contain small business requirements. Issues may sometimes arise as a result of the small business requirements. In some cases, a protest may be initiated to contest a winning bidder’s small business certification on various grounds such as minority status, control by third parties, size of the small business, or the personal net worth of the small business owner.

There are an endless number of reasons why a bid protest may be initiated. Whether you are a winning bidder who is the subject of a bid protest or you are an interested party who believes that the process was flawed, contact us. At DBE Direct, we have experience representing parties involved in bid protests. We can help you defend a bid protest and keep a contract you’ve won or initiate a bid protest to win a contract you thought you lost.

ACDBE is an acronym for Airport Concessions Disadvantaged Business Enterprise. The ACDBE Program is similar to the DBE program in that it is a Department of Transportation (DOT) program designed to level the playing field for small businesses who wish to participate in contracting opportunities at airports.

To be an ACDBE a firm must meet the following criteria:

1) Operate as a for-profit business concern (no non-profits).

2) Be a small business as defined by the Small Business Administration

3) Be at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged or, in the case of a corporation, in which 51 percent of the stock is owned by one or more such individuals

4) An ACDBE’s management and daily business operations must be controlled by one or more of the socially and economically disadvantaged individuals who own it.

5) Owners must be a citizen (or lawfully admitted permanent resident) of the United States.

Socially and economically disadvantaged individual means any individual who is a and who is—

1) Any individual in the following groups, members of which are rebuttably presumed to be socially and economically disadvantaged:

(i) “Black Americans,” which includes persons having origins in any of the Black racial groups of Africa;

(ii) “Hispanic Americans,” which includes persons of Mexican, Puerto Rican, Cuban, Dominican, Central or South American, or other Spanish or Portuguese culture or origin, regardless of race;

(iii) “Native Americans,” which includes persons who are American Indians, Eskimos, Aleuts, or Native Hawaiians;

(vii) Any additional groups whose members are designated as socially and economically disadvantaged by the SBA, at such time as the SBA designation becomes effective.

(viii) Any individual determined by a recipient to be a socially and economically disadvantaged individual on a case-by-case basis.

At DBE Direct, we are prepared to assist eligible firms in obtaining ACDBE certification, appealing certification denials, defending eligible firms in bid protests or initiating bid protests against firms not eligible to participate in the program. If you are interested in obtaining ACDBE certification or have questions or concerns about the program please call us at (305) 755-9551.